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The Gunnison County experience

In Gunnison County, where the Crested Butte ski area is located, the community had to be convinced before it agreed to provide air-service guarantees.

John Devore, CEO of Gunnison County Airport, tells how it came about.

"Up until four years ago the (Crested Butte) ski company managed the commercial air service during the ski season; so they did the contracts with the air carriers. Then they fell on financial hard times… and they had an 11-year contract with American Airlines to fly here with no revenue guarantee. So when that 11-year contract came and went American Airlines said they would never see another contract like that again and rode off into the sunset," Devore recalls.

"So the community went through two or three years of debate on what to do about commercial air service, because a portion of the community thought that because we had an airport, airlines would fly. We tried to explain to them that today’s world is totally different and that took a couple of years. But in 2002 community leaders and business leaders met and we talked about getting in control of our own destiny."

The airport is owned by the county. Commercial carriers make lease payments for space within the terminal, pay landing fees and a fee for in-plane passengers. There is also income from leases within the airport terminal, including restaurant concessions, rental cars and ground transportation. But it all starts with aircraft carrying passengers to the airport.

"The feeling was that we wanted to create something that would generate a tax source that would provide the revenue to be able to go out and negotiate contracts with air carriers," said Devore.

It began with a retreat organized by the board of county commissioners in February 2002.

"And we were talking about the local economy in general and the information that we were getting back from a variety of sources was that we did not have enough money to market ourselves and that for an air service we were not going to be competitive," said Devore.

"And that year the ski company was also for sale so the commissioners decided that they would take the initiative and convene the community meeting to talk about the future at Gunnison County, and more specifically what we were going to do about air service and marketing."

The retreat led to two initiatives presented to voters later that year.

"We did two things; we put an initiative on the ballot called a rule for a transportation authority, which is a rule allowable under the Colorado statute and sales-tax funded. And then we put a second initiative on the ballot from the marketing district to increase the lodging tax, so we could market the program. And both of those initiatives passed in November 2002 by over 70 per cent.

"We were the first in Colorado to do that and to my knowledge we were the first ski area to negotiate a tax funded pot of money to go and negotiate air contracts with."

Devore said the Gunnison County/Crested Butte stakeholders have come to see their airport as a profitable enterprise. Through taxes the community helps share the risk by guaranteeing some airline seats and promoting the area.

"What we discovered is that the marketing message needs to be the same – it can’t be disjointed," Devore said.

"If you’re not a high demand destination, in terms of year round service, basically what (the airlines) tell you is that if you don’t have a broad-based revenue source for airline guarantees and if you don’t have money for marketing then don’t talk to us," Devore said. "Because it’s about sharing the risk – that’s what it’s all about.

"A total of $2.3 million is available from the community and they’re happy to pay that because they can see the benefits rolling in," Devore said.

"But we were fortunate because they get money through the FAA, because part of the ticket price collected by the FAA goes to funding new airport projects.

"So we’ve probably spent, between local dollars and federal dollars, about $20 million on the airport in the last eight or nine years."

Gunnison County sees itself as an island in the Rocky Mountains, Devore says. "We’re not easy to get to, there’s no interstates so if you don’t have good air service you are not going to be competitive with peers.

"But to build an airport the community has to get behind the project. It really has to be a community effort in terms of getting everybody on the same page about the same issue at the same time so you can accomplish something."

Devore said about 30 per cent of skiers now arrive by air, and one of the biggest users of air service is Club Med.

Gunnison County Airport currently has slightly under 30,000 airline seats, with a goal of getting to 55,000.

"Hopefully by next year, and we’re trying to be intelligent about how we do it so we get the right aircraft coming out of the right market," Devore said.

The right sized aircraft for each market is critical, Devore says.

"American Airlines doesn’t fly here anymore because the only aircraft they can bring in is a 757 out of Dallas which is 183 seats. And if you bring that size aircraft daily you might as well give the guarantee on the front end because you’re not going to make money with it.

"Whereas with Delta, they fly here from Atlanta with 757s, they do one Saturday-only flight and if you look at the booking reports, it’s already booked at 65 per cent.

"Same way with Dallas, we use 50-seat passenger regional jets, and out of Houston we use 737s.

"That’s the other thing that we do is look at the market and what we can generate out of it and book the size of aircraft, both for frequency and seats, so we don’t end up shooting ourselves in the foot.

"Because we’ve got the air service but you’ve got to fill the plane up."




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